Posts Tagged ‘Real estate agents’

Flat fee brokerages have been around for a long time, and recently there have been a few additions to the real estate flat fee brokerage world. For those who do not know about these companies, they attract home sellers by promising to list homes for a set fee that is lower than what the average real estate agent will charge for the same work. This sounds great right? Many sellers agree and sign listing agreements excitedly, without considering the facts.

Here are some reasons to truly investigate flat fee brokerages prior to signing on the dotted line:

1.Service. There are new flat fee brokerages out there that promise to provide the same great service as traditional agents who charge more commission to do the same work. Make sure you understand what you are getting for the price you pay.

Flat fee agents tend to have a LOT of listings. I know from much personal experience that one listing alone requires a lot of my attention and availability. Personally servicing multiple listings will jeopardize service.

Also keep in mind that flat fee agents do not get paid much per listing – they make up for that in volume. Will that lead to lack of attention to your listing? You need to figure that out.

2.Paperwork. Many flat fee brokerages charge such low fees because they do not actually handle paperwork or showings. There are those who promise full service, but MAKE SURE you get an explanation of exactly what that means – if you have it in writing and the agent cannot deliver you should be able to fire him or her (see number 3).

3.Check the contract thoroughly. Many flat fee brokerages have clauses in their contracts that sellers may not understand, such as agreements to purchase replacement property only with the brokerage (remember, flat fee brokers make more money from buyer sales than from listings since they get paid full commissions for those), to only use affiliated mortgage companies, or to forfeit money if you cancel the contract. Be careful and make sure you fully understand what you are signing. It is also very important to make sure that you can fire your agent/brokerage if you are not satisfied – at any time – without being penalized or trapped in a contract. If you need help deciphering these contracts, seek legal counsel.

4. Check the brokerage client satisfaction history. It is always important to check testimonials and stories from clients who have used the services of any broker. Spend time researching not only the broker’s own site and third party sites (like Zillow or Yelp), but also check news stories online. You may be surprised at some of the negative press you find on the brokerage.

5. Legalities. Keep in mind that selling a home is a legal transaction – if you do not have someone to guide you it could be dangerous. In order to avoid being sued it is always a smart idea to work with a real estate agent who can help you with paperwork and deadlines, as there are many of both in every real estate transaction. Not to mention, brokerages have insurance to protect against many issues that may arise, IF they were representing you. Flat fee brokerages that just list your home on the MLS and have you do all the work may set up situations that are ripe for breaches of contract and non-disclosure issues, among others. Make sure you have someone guiding through the sales process, or hire an attorney to look over all your paperwork.

There are some new flat fee brokerages out there that are trying to change the way the flat fee business is handled by promising stellar service. This is a great intention, but if you are a seller make sure that you understand the contract you sign, as well as your rights. You may want to speak with traditional agents to compare services.

*****

The bottom line is that commissions are not set in stone, but you do get what you pay for in most cases so make sure you understand to what services you are entitled for what you are paying. If you are not happy, you should be able to fire the agent.

I’ve seen a lot of changes in the real estate industry over the last 14 years, and one of the biggest has been the increase in the number of “teams.” A team is a group of real estate agents who work under one broker. For example, say John Smith works for Real Estate Company, and he forms a team of 10 agents. They all work for Real Estate Company, but they work together with John Smith as his team members; multiple agents may work together with a client during a home sale or purchase.

Many people wonder how a team can benefit them if they are a buyer or seller, and whether it makes more sense to hire a sole agent or a team. Needs and opinions will vary, but here are the reasons I feel that working with an experienced sole agent, rather than a team, can truly benefit buyers and sellers:

1. Facts and details. As a sole agent, my clients know they are working with ME. They will not have to deal with a slew of other agents, assistants, secretaries or other people. If they have a question, they will be able to reach ME. I always answer my phone and if I am with another client or in a meeting, I call back quickly. My clients love this, because I know what is going on at all times in regards to their sale or home search. In turn, it benefits me because I do not have to check in with someone else to find out what is going on before calling or visiting a client.

2. Relationship. I have ALWAYS said the real estate is not just about selling property – it is about forming a relationship with the person who is entrusted to handle a legal transaction on your behalf. Buying or selling a home or investment property is fraught with legalities – you need to know that the person you select to help you truly has your back. I believe (and my clients confer) that it is easier to form a relationship with one person who is dedicated to serving you.

3. Connections. Team members often claim that they provide superior service because they have a bevvy of “exterior” (not agents) experts – loan officers, escrow officers, title people, contractors, etc. Well, guess what? Sole agents have those too – in fact, I have a list with many kinds of referrals that I have compiled over the years, and my clients reap the benefits.

4. Numbers game. As a sole agent my goal is to be there for my clients. I don’t focus on how many sales I can make, but rather on how I can best serve each individual to the best of my ability. If I cannot then I will not take on new clients. The key is dedicated service, not a numbers game.

People have different opinions on how their needs can best be served when it comes to real estate transactions, and that is great. If you are planning on buying or selling real estate, it is important to figure out what you expect from your relationship with your agent or team, and to make that clear up front. Most importantly, make sure you find an area expert who has experience selling homes. A large percentage of agents have secondary jobs and do not think of real estate as their career – find one who is a professional.

If you are a listing agent or a seller who has hired an agent to sell your home, this is an important rule that is often ignored by agents – and it can cost home sellers a sale. It is not written down anywhere and is not required, but it is necessary in order to assure smooth closings. What is this rule? Listing agents must prepare reports for appraisers.

As long as I have been listing properties I have been preparing reports for appraisers. The appraiser, who is sent out by the buyer’s lender to evaluate a property that is in escrow, may not know the neighborhood well or even be from the immediate area. He or she also may not understand why a similar home sold for more or for less. Since the buyer’s agent is not allowed to communicate with the appraiser it is in the best interest of both parties that the listing agent take this advice to heart and come prepared.

I have had many appraisers tell me that they did not need me to meet them at the property or prepare anything, but I still do bothand I have to say that almost all of them end up spending at least a few moments at the end going through my report with me.

Here is what I include in my appraiser reports:

1. A brief but concise analysis of all comparable sold properties – usually within the last 6 months, comparing and contrasting them to the subject property. I also let the appraiser know if there were multiple offers, as this can attest to the fact that many thought the property value was accurate.

2. A list of any upgrades or improvements in the subject property

3. Analysis of any pending sales, including prices I can usually obtain from the listing agents to help

4. A comparative market analysis sheet that lists all the comps and the pending subject property

5. All relevant listing sheets (for each property analyzed)

6. Any relevant sales statistics graphs for the area, and

7. A listing flyer

I have never had a listing that did not appraise.

Every listing agent should be sure to include this report as one of their duties. It is the duty of a listing agent to represent their sellers to the best of their abilities, and this simple step – which usually takes about an hour (more for tricky comparable listings) could make a difference in getting the buyer and seller to closing.

As many in the real estate industry anticipated, the mortgage interest rate has been raised, and predictions are that rates will go up again, possibly multiple times this year. What does that mean for home buyers, sellers and the real estate market in general?

1.Inventory will likely remain low. Since inventory in most markets is already low the rise in rates could keep it that way. That is because home sellers who were considering selling may choose to stay in their homes. Those who have low mortgage rates currently may decide not to make a move if their new rates will be higher – it will all depend on numbers for many sellers. OR – there is always a chance that rising rates may cause some to sell quickly in order to prevent being locked into their homes for potentially years to come…it will remain to be seen.

2.People may be priced out of markets. If there are fewer homes on the market then home buyers will have a more difficult time finding homes due to high demand and low supply, which normally creates higher prices. As competition heats up, some buyers – likely many first time home buyers – will be priced out of the housing markets in many areas. Unless home builders supply the market with new inventory there could be a stall ahead.

3. Cash buyers will continue to play a role. In many markets, especially condo and townhome markets priced at $650,000 and under, I believe cash buyers will continue to be out in force snatching up these properties. Many first time buyers will have to contend with these cash buyers, and usually that is a losing game for the buyer who is getting a loan (since cash buyers do not require appraisals and can close more quickly; not having to rely on a lender to get the sale closed is a plus to many home sellers).

4.Rental market will continue to be saturated. If the above holds true then the already saturated rental market will continue to be busy – landlords will be able to make good money and raise rents because there will be plenty of renters needing homes who will pay the higher prices if current tenants cannot. This point correlates with the increase in cash buyers that we have seen lately in the “lower end” markets – many of them have been purchasing the lower priced properties for income potential, and it is a great time to make money in the rental market.

5. Real estate industry could see changes. With less inventory real estate brokers and agents could see a big change in the industry. Much like the exodus of sales people during the foreclosure crisis of 2008-2011, I predict many agents will again leave the business because they will not be able to survive in such a tight market. I also predict agent commissions will go down if there are fewer homes which sell faster.

The bottom line is that the real estate market in many areas, at least here in San Diego County and others in California, is still “hot,” but it is getting more difficult for people to get into it. This could affect future home ownership rates and the real estate industry as a whole.

Real estate agents wear many hats – from negotiator to chauffer to therapist, and that’s just for starters. A real estate agent often must take clients by the hand and walk them through the home search or listing process, as well as the subsequent purchase or sale transaction. But there is one thing that agents need to keep in mind during these busy and sometimes emotional times – responsibility for clients.

Responsibility for one’s clients as it relates to agency comes in many forms – some are spelled out in the ethics code (such as the duty to disclose), and some come from law (such as anti-discrimination, personal injury, tort and criminal law). But many situations with clients fall into a gray area when it comes to responsibility. One of those most important is the responsibility to accompany clients when viewing a property. If an agent does not do so there could be legal ramifications, say for example if an injury or property damage occurs.

Here are some tips to use when showing property to keep you and your clients out of harm’s way and avoid potential legal action:

1. Never let clients visit a property alone. While this seems obvious to many of us, I have read stories of agents giving clients one day lockbox codes or passing along entry instructions. As the representative of your clients you need to understand that this action can land you in hot water – unless you have been authorized by the property owners in writing to allow your clients to enter on their own (and I still would never allow that). Let’s just say there are a handful of legal issues here – from trespassing to other issues of someone gets injured or breaks something, or leaves a door/window open which could allow a thief to access the property.

2. Make sure you stay with your clients as they tour a property. Again, if you allow your clients to wander off it could cause problems. If it is a large property you especially need to stick with your touring clients. Make sure you and they have access to all areas of the property. If your clients have small children and there are potential hazards (steep or dangerous areas or animals, for example), make sure your clients do not wander off alone without permission and without you at their side.

3. Ask the owner or listing agent if you are allowed to access areas about which you are unsure. If there is a part of the property that you are not sure about, ask the listing agent or owner if you have permission to explore there. For example, a guest home, separate structure or animal pen, or flowing water. Oftentimes a listing agent will specify whether such areas are able to be viewed, but if not don’t ever assume.

The bottom line is that if your clients are not in your presence while touring a property, they could end up creating problems or suffering injuries to themselves or their property. If they were being careless and wandering around without permission, they likely will not have rights to recover for injuries suffered. Make sure to establish this right off the bat in order to protect yourself and your clients.

If you have been looking for a home recently you may realize that doing so has become tougher: there is less inventory out there and when a great home lists there are often multiple offers. So how does a buyer get ahead to secure a home when many others are in the same situation? Here are some tips.

Hire a great real estate agent. This is above all the number one way to find a home in a tough market. Not only can your agent give you advice about what price and terms may get you that house you love, but they are also locally connected, which can make all the difference in the world.

Here is an example – After losing out on a few multiple offer situations I found buyers a home through my connections with other local agents – one that had not gone on the MLS yet. In another situation, I notified buyers of a home that was about to come on the market (they lost out on purchasing my listing in the same neighborhood), and they got into contract prior to the home going on the MLS. Some say this is unfair for the other buyers out there as they never had a chance to see or bid on the home, but many real estate sales work this way. Those of us who work particular areas often stay in touch and know when there is a listing coming up. Having that on your side as you search for a home is priceless.

Be Paperwork Ready: There is no better advice than to be ready to make an offer. This means you need to be preapproved with a lender (the lender should have all your paperwork so s/he is ready to go once you write an offer, and you should have a preapproval letter). Have a copy of your latest bank or investment statement showing proof of funds for your downpayment, in order to submit with your offer. Your offer should be as strong as possible so speak with your agent to determine what needs to be in there and what may be left out in order to avoid a multiple offer situation.

Know what you want: Often this is difficult when one is focusing on multiple areas or neighborhoods, but if you really know those you prefer, including floorplans and other amenities, you will be able to act quickly to see the home and make and offer. Even if multiple offers do come in, being first to present can often be helpful. Start looking at areas and homes before you are ready to purchase – the more information you have the better and more prepared you will be when the time to buy is right.

All in all, buying a home in a low inventory market can be tough. With interest rates rising every day counts – if you can lock in a rate prior to another rate increase that is great – and it just means you need to be ready when that right home becomes available. Of all the above tips, having a great buyer’s agent is the best advice I can provide. Many people think they can find a home without an agent, but a good agent is worth her weight in gold when it comes to finding the right home.

Recently I was contacted by home sellers who wanted to talk to me about their home sale – they were in escrow with another agent and were very unhappy. There were some legal issues and the agent was non-responsive and not representing them to the best of her ability. They had no idea that they may be able to fire the agent, so I thought it was a good idea to again share this tidbit with all the sellers and potential sellers out there – and also for buyers.

If you are a seller who is unhappy with your real estate agent, you may have the right to cancel your contract in the state of California if the agent is not adequately representing you. There are a few things to keep in mind though, as you make your decision:

1. Contractual Breach or Valid reason – If your agent is not representing you to the best of his/her abilities, your first step should be to contact the broker. You need to explain your concerns and desire to cease working with the agent. If you cannot agree to a mutual cancellation, you may need to prove that the agent is not performing her/his contractual duties or doing their due diligence (does not call you, does not explain paperwork or provide details on the sales process, etc.) or provide some other valid reason to cancel. Brokers may want to try to resolve the issue first, or may want to personally step in to make sure you are well cared for during the remaining time the contract is in effect. Check over your contract to make sure you understand specific duties and can show they are not being done.

2. Mutual consent – this is an easy way to cancel a contract with a broker/agent – say your circumstances have changed and you no longer will be moving – most brokers will allow a cancellation at that point (no one wants to market a home that will not sell).

3. Legal termination – if you have tried everything above and the broker/agent will not consent to a cancellation, you may need to seek a legal remedy to cancel your contract. Check your contract to see if there is a legal remedy specified therein, like mediation and arbitration. If not, seek the guidance of a real estate attorney.

****

There are some other things you need to keep in mind when considering canceling a contract with your broker/agent:

1. Agent may be entitled to commission for prior showings: If a buyer came along while the contract was in place and they make an offer after it has been canceled, the agent may have a right to a commission. You need to check the language on the listing agreement and see how long this period will be in effect. On the California Residential Listing Agreement this is a fill in the blank – most agents will write 30 days but make sure. This can apply to prospective buyers to whom the agent showed the property, or those who saw it with another agent.

2. Costs and Fees – Check your contract to make sure that you will not be liable for any costs and fees to the agent if you cancel the contract. Brokers or their agents would have to specify such in the agreement and most do not, but make sure you know if you will be liable for any.

3. Marketing materials will not convey. Any marketing materials procured by the broker – photographs, flyers, advertising, etc., are the property of the broker. If you start all over with another broker/agent you will have to start all over with marketing as well (unless the prior agent agrees to let you use their materials, but that is doubtful if you are firing them.

****

My best advice is to make sure when you are entering into these contracts that you have a way out if you are not happy with the service provided. I tell ALL my potential clients that they can fire me at any time, so long as they first communicate with me any unhappiness so I can try to rectify it. But I would never force a client to remain under contract terms if they are unhappy – I don’t want anyone to be unhappy because that not only makes me feel bad but also affects my business.

For years the idea of lowering real estate commissions has been the topic of conversation amongst many in the real estate industry. Since the discount brokerages came onto the scene in full force back in the early 2000s, many home sellers have sought out agents who will cut commissions to save sellers money. Could lower commissions eventually become the norm?

A recent study by Realtor Magazine indicated that 62% of buyers and sellers want lower fees in real estate transactions, yet of those 22% still want to receive quality service and worry that low fees do not go hand in hand with that type of service. So while sellers want to pay Wal-Mart fees, they obviously still want Nordstrom service.

I have written many blogs over the years about the benefit of working with agents who provide stellar service – not just in marketing a property or knowing a neighborhood, but with respect to the very important legalities of real estate transactions – negotiations (by the way, 89% of sellers in a recent study indicated that negotiation was the number 1 skill they desired of their real estate agents), paperwork, disclosures and other potential liabilities.

Many sellers for years have complained that it is not right that an agent can be paid 2 1/2-3% of the purchase price for a million dollar home and the same for a $300,000 home. The real question is how much work is that agent doing? I personally know of listing agents who “list and pray,” doing virtually no or little work to market a home and bring a buyer without spending time or money out of pocket. Also, what about the buyer’s agent who has been working for months with her buyers, showing them 20, 30+ homes, driving the around to show them areas and being there on hours of phone calls, writing offers…that agent gets nothing until she actually closes a sale, which may or may not happen.

If you wonder what agents actually do, here is a list of some of the things your agent should be doing…so do not be afraid to ask your agent what he or she is doing for you.

1. Marketing – this varies vastly so make sure you understand the marketing plan that is proposed

8. Showing the property (being available to do so – you’d be surprised how many agents are not)

9. Negotiations with the other party/agent – this does not stop after a contract is signed, as it is still often necessary for repairs/credits.

10. Providing a list of repair people if needed

11. Constant communications with all parties involved – agents, lender, escrow, title, and of course, you

12. Making sure you have copies of your entire file at the close of escrow, and helping with other things like finding agents out of the area if you are moving somewhere else, or helping you synchronize closings of current and new homes. I have even helped clients move out and clean up after everything is taken from a home.

Of course each listing may require a different plan, and some may need more pre-listing work or more marketing than others, which of course means more money. So, will lower real estate commissions eventually become standardized? That remains to be seen but hopefully if they do, quality service won’t go down with them.

Big brokerages thrive on hiring as many sales people as they can to increase profits. Some will hire anyone and others are more picky, but some of the bigger corporate brokerages offer lots of training and support to new or unseasoned agents, which is a big lure when searching for a place to hang a real estate license. The support and mentoring provided by these firms tend to draw many to their doors. But could there be a new threat on the horizon for big brokerages?

The latest brokerage to hit the real estate market is called the “Freedom Brokerage” – virtual brokerages without brick and mortar offices, which allow agents to save lots of money in most cases. Keep in mind that brick and mortar companies have to pay for their building space, utilities and supplies, as well as online programs, printed materials, websites and insurance, to name a few. They have to shell out money to keep their agents learning and motivated so that they will make money for the brokerage, but most of that money that goes out is passed along to the agents in some way (office fees, seminar fees, supply fees, etc. – there are many names).

Freedom Brokerages allow agents to hang a license with a company that lacks the brick and mortar hub (which seems very passe in today’s real estate market anyway – why pay for an office when you can do everything from a home office or other space?) This keeps the costs down. The idea appeals to many agents, who want to avoid all of the big brokerage costs. But it also is probably not the best idea for new or unseasoned agents, unless they are self-starters and do not need any hand-holding.

I applaud the new ideas that are popping up to keep real estate exciting. Personally I do not think we need brick and mortar offices. There are many options available for those who need a true office space and do not want to meet clients at a home office or at Starbucks. There are hub offices, where space is shared with other members for a monthly fee, and there are executive suites – where you have your own office or might share it with one or several others, with a live human who answers your phone possibly included. These ideas allow an agent to have an office address and space for meeting when needed.

So if you are considering leaving a brick and mortar corporate brokerage, look into the options. If you are a seasoned agent and a self starter, or even a confident new agent with someone who can help mentor you (although personally I think new agents need extensive training, and may get it best from established brokerages), it is a great idea which will save much money. Why pay all your fees to a big brokerage if you don’t have to?

There are some agents who may disagree with what I am about to say, but calling sellers whose listings have cancelled or expired can be annoying and disrespectful. If that is a method you use to find your next listing, and if it works for you, I am certain you won’t want to change your habits, but consider what some sellers think about the practice.

This week I took a cosmetic fixer listing off the market, as the seller was faced with several challenges and we decided this was her best course of action. I warned her that she would get a lot of phone calls and mail from other listing agents, asking her to list with them instead.

This morning my client received 10-12 phone calls by 9 AM, and one of the agents had even called her before 8 AM – this is extremely rude. She was so offended that she threatened to sue him for harassment should he call again. She disconnected her phone until next week to avoid any further calls.

Personally I have never used this method to find clients – I feel it is invasive and, as my client said, such agents are “hovering vultures.” I compare it to cold calling; many years ago when I was a graduate student I had a job cold calling people on behalf of bond salespeople. Most people were annoyed, as I often am when I get uninvited sales calls. Needless to say I quit that job.

Earlier this year other seller clients of mine had to take their home off market for personal reasons, and had decided to keep their home rather than move. They had SO many calls when we took their home off the market that they were overwhelmed – they said many of the agents were rude and pushy. They too stopped answering their phone for several days.

I am sure there are some agents who are so good at being “salesy” that they actually obtain listing appointments as a result of such calls, but I still personally disagree with the concept and feel it is not classy.

I believe most people nowadays place a high value on privacy, since technology has made it difficult to maintain. If a seller does not have a number listed chances are he or she does not want to be contacted. If you are an agent who chooses to solicit sellers with expired or cancelled listings, my advice is to use the mail – that puts the choice in the sellers hands whether to contact you, and saves a lot of aggravation.